May 25, 2016

Last
time out, we learnt how a simple waiver clause can protect your business from
unwarranted liabilities. In case you missed it kindly follow #LegalBusiness to
get updated.

BeWise
Digital Limited had only recently started engaging with some major
international partners and Becky had come to realise that she needed a website
to properly portray her corporate image to the world. She was scheduled to
speak at an international conference in 6 weeks and needed her website to be up
and running before then.

Becky
quickly enlisted the help of a freelancer website developer named Tunde who
promised to deliver the website within 2 weeks. They agreed that she would pay
half of the money before he starts and the other half after he delivers. These
agreements were all made orally, no written contract was signed.

After
two weeks, she called Tunde to ask if the site was ready and he said he was
experiencing some technical issues and would get back to her. Another two weeks
went by and still the website was still not ready. Tunde had started to ignore
her calls. She had no idea of where she could locate him as he had no office
and all she had was his phone number. Becky was furious. The unsavory prospect
of speaking and networking at the international conference without a proper
online presence to boost her company’s profile stared her in the face.

She
frantically started looking for another web developer and was introduced to
Linus who agreed to take on the job. Linus worked day and night and delivered
the website in 10 days… just a few days to the start of the conference. Becky
was relieved. It had been a close shave.

5
weeks after the conference, she got an email from Tunde the missing web
developer saying, “website completed and ready for demo. How soon can you make
payment of balance?” Becky couldn’t believe her eyes. She replied him in some choice
words that he was lucky she had not gotten him arrested for defrauding her of
her initial deposit. She told him she had given the job to someone else who had
delivered her website to her. Tunde was shocked and asked why she did not
communicate to him that he should stop work on the site. He went on to tell her
how he had spent his time and resources to finish and host the site and
demanded to be paid his balance. A week later Becky got a letter from Tunde’s
lawyer threatening legal action.

Becky
consulted her own lawyer… ready to fight it out. He asked her what her contract
with Tunde stated in relation to delivery timeframe of the website and she
responded that there was no written contract. All they had was an oral
agreement.

Her
lawyer was disappointed. He had warned her several times against having oral
agreements with her stakeholders. He advised her to allow him negotiate with
Tunde to pay a reduced percentage of the balance because if the matter was to
go to court, her chances of winning would be low since she did not communicate
to Tunde that she was no longer in need of his services, and she had promised
to pay up after delivery of the site.

Becky
reluctantly agreed and ended up paying 85% of the amount for a website she was
never going to use. She was furious with herself for making this mistake.

Case
analysis

Are
you like Becky, do you make oral agreement with your stakeholders? Do you
choose to work with people without having proper contracts documented showing
critical clauses and contact addresses? Then you need to rethink your choices.

A
simple agreement containing the necessary clauses like the time frame for the
job, the terms of the contract, the instances that would lead to termination of
the contract and so on would have saved Becky from wasting money on a website
she didn’t need.

As
professionals and entrepreneurs we need to ensure we get our lawyers to put
proper contracts in place to govern all engagements with our key stakeholders.
Where contracts are presented to us for execution, always give it to your
lawyer to go through it to make sure the terms stated therein are favorable to
your business.

You
know how we roll, hit me up in the comments section and let’s know your
thoughts. One more thing….. you are AWESOME!